US dollar falls as markets bet on US Federal Reserve to finish ‎raising interest rates

US dollar fell to low levels today, Wednesday, after falling overnight with the issuance of a surprisingly weaker inflation reading in the United States, which reinforced bets that the Federal Reserve (central bank) had reached the end of its monetary policy tightening cycle.

At the same time, the offshore Chinese yuan received some support after domestic industrial production and retail sales growth exceeded expectations.

According to Reuters, Rob Carnell, head of research in the Asia-Pacific region and chief economist at ING, said that the activity data generally appears to be “further evidence of the very slow progress” in the Chinese economy.

The yuan rose briefly abroad, hitting a three-month high of 7.2385 against the dollar, before retreating slightly to $7.2477.

At the same time, bleak news continued to flow from China’s real estate sector, as official data showed sales falling at a faster pace in October and investment declining.

Carnell said that with no end in sight to the problems in this sector, this is likely to trickle down to other parts of the Chinese economy.

New Zealand dollar rose to its highest level in a month at 0.6029 against the dollar

Intensive selling of the dollar led to a rise in many of its counterpart currencies, with the euro remaining close to the highest level in more than two months that it recorded on Tuesday.

The feverish activity in the currency market arose due to data showing that consumer prices in the United States remained unchanged in October, with an annual rise in core inflation at the lowest pace in two years.

In the 12 months through October, the CPI rose 3.2%, below economists’ estimates, after rising 3.7% in September.

The data led market participants to expect that the US Federal Reserve would not raise interest rates again at the monetary policy meeting in December.

The dollar index, which measures the currency’s performance against a basket of currencies, recorded the latest reading at 104.14, which is not far from the lowest level in two months that it recorded on Tuesday at 103.98.

As the dollar fell, the euro settled near $1.08725 after touching its highest levels since August the previous day.

British pound recorded $1.2489, approaching levels last seen in September.

The US currency’s overnight decline provided some support to the weak yen, which rose from a new one-year low recorded on Monday at 151.92.

The dollar against the yen recorded a slight increase to 150.68, as data revealed a contraction in the Japanese economy in the period from July to September, which complicates the central bank’s efforts to gradually exit its ultra-loose monetary policy.